Global stock markets hit record highs, Bursa Malaysia surges

Global stock markets surged to record highs on Wednesday, propelled by a strong performance in technology stocks on Wall Street and easing geopolitical tensions. The Dow Jones, S&P 500, and STOXX Europe 600 all hit new peaks during trading. Asian markets also saw gains, with Japan's Nikkei 225 and South Korea's KOPSI rising significantly.

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The most anticipated development by the market is the reopening of the Strait of Hormuz, a vital shipping route for global oil supplies. The decline in oil prices shows the market has placed a high geopolitical risk premium on oil prices.

The local stock market, Bursa Malaysia's FTSE KLCI, closed higher, gaining 15.51 points to 1,748.17. This rise mirrors the positive global sentiment, with analysts anticipating improved economic growth for Malaysia, particularly benefiting its export-oriented economy.

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As tensions begin to ease, the risk premium also subsides rapidly, causing oil prices to fall.

Professor Dr. Yeah Kim Leng of Sunway University identified the positive sentiment surrounding peace talks between the US President and Iran as a key driver. He explained that President Trump's decision to avoid attacking Iranian oil facilities eased fears of a larger conflict, which had previously threatened global markets. The anticipated reopening of the Strait of Hormuz, a critical oil shipping lane, also contributed to the market's optimism, leading to a decrease in oil prices as geopolitical risk premiums diminished.

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As long as the ceasefire holds or a comprehensive peace agreement is not finalized, the positive sentiment remains fragile and can change at any moment. If negotiations fail, the risk of renewed geopolitical conflict still exists.

However, Professor Yeah cautioned that the situation remains fluid, citing President Trump's unpredictable nature. He stressed that market optimism is fragile until a lasting ceasefire or comprehensive peace agreement is finalized. Despite this uncertainty, current market sentiment favors risk-taking, which is helping to stabilize equity markets. The professor added that the positive global outlook is expected to bolster Malaysia's economic prospects, providing a stronger foundation for its stock market.

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For now, market sentiment is more positive and investors are willing to take risks again, helping to stabilize equity markets.